07-02 SEC Approves Amendment to Interpretive Material 2210-4 (Limitations on Use of NASD's Name) Requiring Firms that Refer to their NASD Membership on a Web Site to Provide a Hyperlink to www.nasd.com; Effective Date: July 7, 2007

07-02 SEC Approves Amendment to Interpretive Material 2210-4 (Limitations on Use of NASD's Name) Requiring Firms that Refer to their NASD Membership on a Web Site to Provide a Hyperlink to www.nasd.com; Effective Date: July 7, 2007

On November 9, 2006, the Securities and Exchange Commission
(SEC) approved an amendment to Interpretive Material 2210-4
(IM-2210-4), requiring a member firm, or a person associated
with a member firm, that refers to its membership in NASD on its Web site to hyperlink to NASD's home page, www.nasd.com.1

Questions concerning this Notice may be directed to Gary L.
Goldsholle, Vice President and Associate General Counsel, Office
of General Counsel (OGC), at (202) 728-8104; or James L. Eastman,
Assistant General Counsel, OGC, at (202) 728-6961.

Background and Discussion

On November 9, 2006, the SEC approved an amendment to IM-2210-4, which sets forth
limitations on the use of NASD's name, requiring a member firm, or a person associated
with a member firm, that refers to its membership in NASD on its Web site to provide a
hyperlink to NASD's home page, www.nasd.com. The hyperlink must be located in close
proximity to any reference reasonably designed to draw the public's attention to NASD
membership. The amendment also applies to a Web site relating to a firm's investment
banking or securities business that is maintained by or on behalf of any person
associated with the firm.2

The amendment provides members, and persons associated with a member, with
flexibility in placing the hyperlink. Specifically, the rule change requires the member
or person associated with a member to provide only one hyperlink to www.nasd.com.
Thus, if a member firm's Web site has more than one reference to NASD membership,
the firm may place the hyperlink in close proximity to any NASD reference that is
reasonably designed to draw the public's attention to NASD membership. Some
firms may choose to provide the hyperlink in close proximity to a reference to NASD
membership contained in an "about us" section of their Web sites, but other firms
may find other appropriate places to provide the hyperlink.3

Firms should note that the amendment does not create an independent obligation
requiring a member firm to refer to its NASD membership on its Web site. The
amendment applies only to the extent that a member firm or a person associated with
a member firm chooses to represent on a Web site that the firm is a member of NASD.

As discussed in the Approval Order, NASD believes that a "legend" posted on a
member's Web site indicating that the firm is a member of NASD would impose an
obligation to provide a hyperlink.4 However, the hyperlink requirement would not
apply to references to NASD membership appearing in a disclosure document or other
offering document that is merely linked to the member firm's Web site.5

2 This requirement is intended to capture, among
other things, situations where a person
associated with an NASD member firm
maintains his own Web site or "home page"
that relates to a member's investment banking
or securities business. For example, NASD
understands that independent contractors or
their firms sometimes maintain a separate
home page for each independent contractor
for marketing purposes.

3 Generally, firm references to NASD membership
in an "about us" section of a Web site are
reasonably designed to draw the public's
attention to NASD membership. See Approval
order at 67184 (discussing firm references to
NASD membership in the "about us" sections
of Web sites).

4See Approval Order at 67184.

5Id.

ATTACHMENT A

New language is underlined.

IM-2210-4. Limitations on Use of NASD's Name

Members may indicate NASD membership in conformity with Article XV, Section 2 of the NASD By-Laws
in one or more of the following ways:

(1) through (2). No change.

(3) on a member's internet Web site provided that the member provides a hyperlink to NASD's internet
home page, www.nasd.com, in close proximity to the member's indication of NASD membership.
A member is not required to provide more than one such hyperlink on its Web site. If the member's Web
site contains more than one indication of NASD membership, the member may elect to provide any one
hyperlink in close proximity to any reference reasonably designed to draw the public's attention to NASD
membership. This provision also shall apply to an internet Web site relating to the member's investment
banking or securities business maintained by or on behalf of any person associated with a member.